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Yesterday in Parliament, we witnessed a shameful spectacle when only 48 Labour MPs voted against the Welfare Bill. The extreme centre, as Tariq Ali referred to it in his book ‘The Extreme Centre: A Warning’, once again failed to vote for the well-being of the citizens of this country. Not content with abstaining over Workfare in the last government, a majority of Labour MPs did so again. Neoliberalism rules in the Labour party in all but those very principled individuals who chose to put their heads up against the flow and say no.

We are told time and time again, that we can no longer afford our NHS or our social security system. We are told that we must reign in expenditure, reduce the deficit, balance the books and even achieve surplus. Our politicians like to remind us regularly that we cannot not leave the debt to future generations. Deficit has become the bogeyman of our times and austerity its friend.

We accept this because we have an incomplete understanding of how our economy and money systems work. Our politicians (through ignorance and design) use the analogy of the household budget to explain why we can no longer afford public sector services and our social security system. Notice I make a distinction between the terms social security and the oft used word ‘welfare’ which has become so tainted in recent times. The connotation of welfare to mean skivers and scroungers has been cleverly used by politicians and the media alike to divide people who either don’t know or have forgotten its origins. Along with the mantra – there is no money – it is used to justify the dismantlement of the safety net for when we are at our most vulnerable and worse still the selling off of every aspect of our publicly provided services to the private sector.

It seems to me that if we are to challenge the view being pedalled by our politicians and many mainstream economists that we can’t afford our public services, and create a decent society for all we need to go back to basics and gain an understanding of how our economy really works. Not the household budget model which serves as a useful means to deceive people who, quite understandably, identify with Micawber the Dickens character in David Copperfield, who said:

We are always told by politicians that tax funds our expenditure – meaning that our expenditure on things like infrastructure, the NHS, and Social Security is limited by that income. We need to start dispelling these pernicious myths which are rooted in our ‘gold standard’ past which demanded that you had enough gold to back your national currency. This arrangement was abandoned as far back as 1971 and yet we are still running our economy and money system as if it were still in place.

Last year, Dr Stephanie Kelton gave a presentation to students in Kansas City in which she challenged these ideas. She used the Monopoly game analogy to explain where money comes from and how the system really works and pointed out that balancing budgets will only suppress growth because it removes money from the public sector’s balance sheet which in turn acts as a drain on the real economy. By which she means the labour, equipment and other resources that produce the goods and services we all rely on. Spending (as she says quite clearly) equals income to someone. She also explains that we are not going to leave a huge debt to future generations, as is being claimed by those politicians who either don’t understand or wilfully misunderstand the reality. The real issue is not affordability but how we ensure future economic prosperity through improving productivity.

This is what she had to say:

‘When you play the game monopoly, you open up the rules, set up the cards and ask who is going to be the banker. So how does the game start? Why doesn’t the banker collect taxes to get the game going? Because no-one has any money yet. So what does the bank do first? It has to issue the money before it can collect anything back or the game can’t even begin. So the spending, the issuing of currency has to come first. And then you read the instructions and it says the bank collects taxes, fines, loans and interest and the bank never goes broke. If the bank runs out of money the bank may issue as much as needed by writing on any ordinary paper. It’s exactly what it means to be the monopolist. That’s why they call it Monopoly. Money has to be spent before it can be collected back.

So you start playing the game and you move you pieces around the board and you land on Community Chest or Chance, you draw your card and oh oh pipes burst, pay $50 – there goes a leakage. You keep on playing, you land on another one and oh oh tax is due pay $100. This game will end very quickly if there isn’t a replacement for the money that is leaking out – so every time you pass GO you collect $200. Why does the monopoly game tell the banker to put in $200 each time you go around? To keep the game going. To let the game continue. You can save in Monopoly in the form of real estate investment. Every time you buy a hotel or a house you pay the banker some money and it’s out of the game – it’s leaked out. Every time you pay taxes it’s money that has leaked out of the system. The banker has to spend out more than it collects otherwise the game will quickly come to an end. Which is to say that if the banker is not deficit spending the game will end much sooner.”

Dr Kelton goes on to point out that even Alan Greenspan, former Chairman of the Federal Reserve knows perfectly well that a government cannot go bankrupt. He made this quite clear when he said under oath as chairman of the Federal Reserve ‘a government cannot become insolvent with respect to obligations in its own currency. A fiat money system like the ones we have today can produce claims without limit”. When faced with a question posed by Congressman Paul Ryan on social security (although as Dr Kelton says it could refer to defence spending, education spending, infrastructure spending or student debt), as to whether personal retirement accounts would help to achieve State solvency (whilst also disingenuously suggesting that social security was going broke and that it would be a good time to move towards personal savings account or in more plain language privatisation), Alan Greenspan replied that there was nothing unsustainable about social security because there is nothing to prevent the federal government from creating as much money as it wants and paying it to someone. However, the real question, he said was, will the real assets be there in the future that those incomes can be employed to purchase? There are, we all know, demographic changes taking place – a shrinking work force and a growing population of retiring baby boomers which it is claimed is the reason why we need reform and privatisation. It is, however, a red herring and the real issue is that with fewer working people producing the goods or services how will we ensure that there are enough for future generations to purchase. If there are not, then competition for a smaller pool of output would then lead to inflation.

Therefore the questions we should be asking are not whether there is enough money but whether we are we making the necessary investments in education and technology or indeed will there be enough resources to ensure that we can continue to be productive particularly in respect to the finite nature of our planet’s resources and how should we manage it? To repeat, the debate can never be about affordability. These are perhaps the real questions for us as a society. What sort of world do we want to live in? One where greed and inequality increases and poor people are dehumanised and impoverished? Or one which is fair and just and treats citizens with respect and dignity whilst also recognising some of the really serious issues we face about the future viability of our planet home?

It is clear from recent announcements in the House of Lords and by government ministers that we are being prepared for the eventual complete privatisation of the NHS and our social security system, both to be replaced by insurance schemes. Not because they have to but because of erroneous ideology which suits the politicians and their corporate friends.

The trouble is, as Mark Twain puts it ‘It is easier to fool people than to convince them that they have been fooled” and it is time to wake up to the deceit which is being practised upon us by those who should be leaders and not exploiters. We have an obligation to ensure that people understand what is happening and why it is happening. We need to educate ourselves and pass it on. Otherwise the lie will be perpetuated remorselessly until there are no options left.

Last week the government quietly announced a review into the biggest political hot potato of all – and almost no-one noticed.

Imagine for a moment that you are the newly re-elected Conservative Prime Minister, and you want to launch an inquiry into whether the NHS should be paid for in future through user charges and insurance, not through tax.

But you’ve got a problem – you’ve just won an election without breathing a word that you were considering such a fundamental change to the funding of the NHS.

So how would you make such an announcement?

Very quietly, of course.

Last week the government did just that.

If David Cameron, or his Chancellor or Health Secretary had announced such an inquiry to re-consider a principle that has been sacrosanct since 1946, you’d expect front page headlines and Newsnight specials considering the implications. You’d expect a bit of a flurry (to say the least) about whether Cameron was back-tracking from his promises about what voters said was their number one issue.

But the launch of this inquiry has not been reported in the mainstream media, at all.

Why? Because it was casually announced by a little known minister, the newly ennobled “Under Secretary of State for NHS Productivity”, Lord David Prior, in the rarefied atmosphere of a House of Lords debate on the “sustainability” of the NHS, moved on 9th July by crossbench peer Lord Patel.

The principle of how the NHS is funded has (mostly) stood firm since 1946, summed up in clause 4 of its White Paper:

“All the service, or any part of it, is to be available to everyone in England and Wales. The Bill imposes no limitations on availability – e.g. limitations based on financial means, age, sex, employment or vocation, area of residence, or insurance qualification.”

That is, the NHS is available to everyone, whether or not they can afford to pay user charges, or whether they are insurable. The question about whether the NHS could be funded through user charges or insurance is answered here: No it shouldn’t.

But where better to have the sort of debate that no one has voted for, and launch an inquiry that no-one has voted for, than in the House of Lords, which no one has voted for?

Prior – recently elevated to the Lords from his stint as the strongly pro-market chair of the Care Quality Commission, formerly a Conservative MP and deputy party Chair – led for the government in the Lords debate.

Before he seized the opportunity to push his agenda, he said he listened to the “strength of feeling” in the unelected House.

“All forms of funding must be looked at. We have to have a plurality of funding if we are to have a sustainable NHS. Whether the extra funding comes from compulsory insurances or certain charges matters not, but it has to come.”

Matters not!? As a true Tory, he says that the funding should not come from taxing the rich (which he does not even countenance), but instead from taxing the sick.

More disappointing were the contributions from Labour peers like (the notoriously pro-privatisation) Lord Warner:

“Our tax-funded, largely free at the point of clinical need NHS is rapidly approaching an existential moment. The voices of dissent and outrage will no doubt be deafening but a wise Government should begin now the process of helping the public engage in a discourse about future funding of the NHS.”

Far from endorsing the tax-funded system that is widely acknowledged to be the fairest way of paying for healthcare, here we have Labour peers suggesting the government should “help” the public to think of other ways to pay for healthcare.

Another Labour peer, Lord Desai, suggested bizarrely that patients should be issued with an “Oyster card” which is deducted whenever a patient uses healthcare, and patients should receive a “bill” at the end of the year, saying this would “help make it clear to people that a free National Health Service is not a costless one.”

Shades of Jeremy Hunt’s daft suggestion to put the price on prescription medicines.

But the problem with the NHS is not unnecessary demands, it is the sheer magnitude of people who need healthcare. An “NHS Oyster card” will not reduce the number of elderly people with acute co-morbidities. And if “consumer demand” is a problem, the solution is to turn patients back into patients rather than healthcare consumers, and remove the market.

Once their Lordships had had their say, Prior concluded for the government, saying that though he “personally” liked a tax-funded system,

“if demand for healthcare outstrips growth in the economy for a prolonged period, of course that premise has to be questioned.”

And he announced the ‘way forward’:

“I would like to meet the noble Lord, Lord Patel, and maybe two or three others, to discuss this in more detail to see whether we can frame some kind of independent inquiry—I do not think that it needs to be a royal commission. We are not short of people who could look at this issue for us; there are health foundations, such as the Nuffield Trust and the King’s Fund.”

Prior ignores the fact that the Kings Fund has already recently carried out an inquiry, the Barker Review, which rejected user charges and called instead for more taxes to pay for healthcare, in particular through a review of inheritance tax and national insurance increases.

Both of which George Osborne has just cut, of course.

So Prior orders another inquiry, this time using people he has chosen and presumably people who will produce the desired result. Such a fundamental inquiry should involve the public and be held in public, but it appears Prior does not want the public involved.

Is Prior, in announcing an inquiry into so fundamental an issue, acting above his paygrade as an unelected junior health minister?

And are we being nudged towards an inefficient, unfair ‘pay NHS’ in the only way possible – undemocratically?

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Editors’ note:

We’ve been inundated with people asking how they can help fight this. We suggest contacting your MP and pointing out to them that the government health minister, Lord Prior, has just suggested to parliament that he plans to launch an inquiry to consider whether we should move away from a tax-funded NHS towards one funded by insurance and co-payments.

Ask them (if they are a Conservative MP) or ask them to ask David Cameron in parliament (if they are not) whether it is now official government policy to consider such a move to an insurance or user-fee funded NHS, away from the core principles of the NHS that have been in place since 1946?

You might also want to remind them that David Cameron said in 2011:
‘Let me make this clear – we will not be moving towards an insurance scheme, we will not introduce an American-style private system. In this country, we have this most wonderful, precious institution and idea. That whenever you’re ill, however rich you are, you can walk into a hospital or surgery and get treated for free. No questions asked. No cash asked. I will never put that at risk.’

In an inspiring and comprehensive speech, Jeremy Corbyn spelt out the aspirations [sic] that the left should have for any future Labour government.. a race to the top, not Osborne’s welfare for the rich and cuts for the poorest and the young. An end to homelessness, hunger, the selling-off of publicly owned assets, zero hours contracts, food banks – that every child matters (not just the first two), solidarity with the trade unions and above all else, an end to the callous and unnecessary ‘Austerity’.

Jeremy specifically emphasised the threat of the US-EU trade deal TTIP… NAFTA on Steroids. He called for TTIP’s rejection not only in terms of its well publicised threat to the NHS and public services but also because of the international threat that it poses to worker and environmental protection legislation across Europe, the UK and the US.

In this speech, Jeremy Corbyn demonstrates by example, just how far the current Labour Party has lost its way. In a recent hustings speech, he was more overt:

“We’ve become cowed by powerful commercial interests, frightened of the press, frightened to stand up for what we absolutely believe in. I want a more equal society, a fairer society, a world at peace not at war. I want a LP at the heart of the community that is demanding those jobs, homes and hope for everyone, so that they can live in a society that is more equal. We are moving in the wrong direction at the present time – let’s turn it around and move the other way.”

The answer is obvious – vote for Jeremy Corbyn because he is the real candidate for aspiration and change!

Tony Benn resisted the entry to the Common market in the first place, and continued to oppose it as undemocratic.

In Arguments for Democracy (1981) Benn is scathing about the fact that multinationals’ profits “made in one country can be exported to another where perhaps wage rates or taxes are low” (sound familiar today?). He goes on in the same pages to criticise the subjugation of British foreign policy to that of the United States before announcing a page later that joining the Common Market was “the most formal surrender of British sovereignty and parliamentary democracy that has ever occurred in our history”. from Civitas

The Greek crisis has finally brought the lack of democracy in the structures of European Union to the forefront. Tony Benn explains why the left opposed and should continue to oppose the EU.

(Unfortunately, this video clip has been posted by Ukip who are the new boys on the block in terms of euroscepticism.)

Uploaded on Sep 26, 2007

Tony Benn talks about the ‘big issue’ of the EU constitutional treaty at the Labour Party conference in Bournemouth, and there is a link to the full meeting here, which also features Austin Mitchell, and Kelvin Hopkins. Tony Benn speaks at about 5:40 mins.